The mainstreaming of crypto-technologies has brought about a brutal schism: on one hand, you have digital currency, and on the other, blockchain–two distinct fields of operation, two separate paradigms of commercial use, two opposing “regimes” of function–both emerging to claim and extend the boundaries of the traditional monetary establishment.  

In short, cryptocurrencies and blockchain have undergone different “evolutions,” different transformations, and different appropriations in the hands of individual and institutional forces.

And although most regulatory and banking institutions haven’t been able to adopt the former, possibly because cryptos were developed to serve as a private and free-market alternative to the very principles those institutions represent, most are racing to adopt blockchain; its potential applications toward commerce and government still emerging, still undiscovered, undoubtedly immense.

 

Mastercard’s B2B Blockchain Network

In a report published by PYMNETS.com, Mastercard filed a patent for a blockchain-based identity data security application. This was the latest upgrade to its newly implemented blockchain API; a system MasterCard had announced during last year’s Money 20/20 conference.

Here’s the skinny: MasterCard’s move was a bold and brilliant step toward this new financial arena. MasterCard, having remained a relatively small and sleepy player in the “tech” field despite its enormous presence in the banking industry, its adoption of blockchain technology has thrusted it toward the front lines of the techno-financial arena as a formidable competitor.

 

  • MasterCard has an existing network of 22,000 financial institutions with which it can begin implementing its blockchain API.
  • Their blockchain will be facilitating payments in their partners’ local currencies, a convenient solution for international customers whose business and regulatory framework may not allow transactions in non-regulated cryptocurrency.
  • Payments across the border can take place as a direct peer-to-peer (or B2B) exchange, bypassing the typical fees associated with intermediary banks.
  • And finally, blockchain technology will allow MasterCard to facilitate payments in a manner that is significantly faster, more secure, and more transparent than many of its non-blockchain-adopted rivals–three challenges that have been at the crux of competitive focus with regard to B2B transactions.

 

In short, MasterCard’s move ushers in an unprecedented level of speed and efficiency that is achievable only through the use of blockchain technology. But what about the other end of blockchain; the use of digital currency?

As MasterCard had made clear during their presentation, digital currency will not have a place in the current system. MasterCard’s blockchain API will be utilized strictly to facilitate and enhance fiat currency transactions.

But the overall industry-wide exclusion of digital currencies is also predicated on the health of the international fiat monetary system. Prior to Bitcoin, there was very little on the horizon to challenge the status of paper money.

With digital currencies in existence as a near-viable alternative, it takes a critical mass either in the negative form of a currency crisis or the positive form of an asset-backed token (such as a gold- or silver-backed crypto) to shift from government-backed money to money backed by a universally recognized form of intrinsic value…that is, the value of a physical commodity.

And should either case materialize, the blockchain infrastructure currently being developed across institutional realms will either have to succumb to public demand for digital currency, or face obsolescence. So, as we’ve said in a previous newsletter, blockchain isn’t going away anytime soon; in fact, its emergence is well on its way to defining the future of international payments.

 


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